Motor insurance costs could fall by further 50%

MOTOR insurance costs could fall by a further 50%, an insurance expert said yesterday.

Dorothea Dowling, the non-executive chairperson of the Personal Injuries Assessment Board (PIAB), said there was still room for “substantial savings” for motorists through greater enforcement of road safety legislation. She also told an Oireachtas committee that six legal firms are responsible for 14% of all PIAB compensation awards which are rejected by claimants, despite the fact that they are unlikely to secure bigger compensation pay-outs through the courts.

Ms Dowling said such solicitors — though they were in a minority — were engaging in the “cynical practice” of rejecting almost every case decided by PIAB.

Ms Dowling claimed that Irish consumers still faced some of the highest insurance costs in the EU.

The Joint Oireachtas Committee on Enterprise and Small Business heard that the average cost of car insurance has fallen by 45% in the past three years — well ahead of the Government’s target of a 33% reduction in premiums. Average motor insurance costs are now at 1989 levels.

However, she claimed further cuts of up to 50% could still be achieved, as the establishment of the PIAB itself was only meant to account for a small proportion of savings which would result from the implementation of all recommendations contained in a landmark 2002 report by the Motor Insurance Advisory Board (MIAB).

Ms Dowling, a former chairperson of MIAB, also revealed yesterday that some solicitors are charging clients upwards of €400 to file compensation claims with the PIAB, even though people can lodge the exact same claim themselves for a standard fee of just €50.

Although the PIAB was established to help injured parties avoid the need for legal assistance, nine out of 10 people still hire a solicitor to file a complaint with the board. The PIAB is unable to inform claimants that they do not need a solicitor to lodge a claim because of a court ruling in 2005.

It is estimated that the average cost of processing a claim through the PIAB is just 10% of the compensation award compared with 46% through the courts.

Ms Dowling also questioned the low levels of profitability reported by insurance firms in 2005 and said their budgets set aside for settling outstanding claims were “not consistent with reality”.

PIAB chief executive Patricia Byron said the board will have achieved over €40 million in savings by the end of next year. On average, the PIAB has brought about savings of over €12,000 for every compensation award of €30,000. All claims are also being processed within the statutory nine-month deadline compared with an average wait of three years through the courts.

The Oireachtas committee expressed concern that 90% of people did not know that the PIAB existed.